Rescoring Can Turn Your Credit Report Around

Oct. 21, 2008 — -- Now more than ever, getting a loan for a mortgage, car or to start a business hinges on your credit score. But the score is only as good as the raw data that go into generating it.

For people who have been held back by incorrect credit scores, there's a little-known way to repair your credit and improve your score in the process, called rapid rescoring.

The process helped Warren Crest purchase his family's first home in Baltimore. When Crest first applied for a mortgage, the lender told him his credit score wasn't high enough to qualify.

"I was thinking, man, this thing just might not go through," Crest, 45, said. "All this time, all this effort, all this money that's already been put out and it may not happen."

Then Rick Lynard, a mortgage broker at Equitable Trust Mortgage, suggested that Crest might be a good candidate for an obscure process called credit rescoring.

"Years ago it meant you'd get a better interest rate perhaps," Lynard said. "Now, not having that credit score and the need for credit rescoring very simply means getting the house or not getting the house."

Your credit score predicts how likely you are to pay off future debts based on how well you've paid off past debts. The problem is that 90 percent of credit reports contain incorrect information, and if your credit report is wrong, then your credit score is probably wrong, too.

Credit rescoring is only available through lenders when you take out a mortgage or refinance. If your mortgage broker or lender doesn't suggest it, be sure to ask if you're a good candidate.

You'll have to provide proof that there are mistakes on your credit report. Then the rescoring experts make your case to the big three credit bureaus via dedicated phone and fax lines. If you're a good candidate, they guarantee results in three days or less. The average cost of the service is $100, which mortgage lenders cover.

"If a consumer were to petition a credit bureau on their own, it would take them 30 to 45 days to complete," said Paul Wohkittel, a rescoring expert with New Jersey-based CIS/Lenders Credit Services. "Thirty to 45 days in the mortgage industry might as well be 30 to 45 years."

Rescoring experts say common credit report errors are medical bills that your insurance company didn't pay on time, bankruptcies and tax liens reported that never happened and accounts missing from your report that would be favorable to you.